Santos court case over Pilliga spill

The NSW Land and Environment Court has yet to decide what penalty will be imposed on Australia's third largest gas supplier for a 2011 spill from a remote coal seam gas well.

Gas company Santos has pleaded guilty to a string of charges related to an contamination spill in the Pilliga scrub in northwest NSW, in one of the first major prosecutions involving the industry.

Santos faces nine charges for a spill of large quantities of salty water, operating a faulty water treatment plant and failing to report the incidents.

The case, brought by the NSW Government under the state's Petroleum Onshore Act, was heard in the Land and Environment Court today.

The incidents occurred in 2011 when the Pilliga operations were owned by Eastern Star Gas, which was chaired by former deputy prime minister John Anderson. Santos took over Eastern Star in late 2011.

One of the key issues to be decided is how much the discharge breached limits and what are the rules about reporting breaches.

In documents tended in the court it appears there is an "expectation" that water discharged into environment will be treated to a certain standard, rather than an actual defined limit on contamination levels.

How much Santos new about the breaches is also a critical issue.

Santos was a share holder in Eastern Star Gas at the time of the breach but the company says they did not hold any position on the board.

How much the board actually knew has also been queried.

An internal engineers report from the time of the spill was not passed on to the board by the chief operating officer at the time.

Santos says it accepts it will be held responsible for the reporting failures, despite the fact they occurred when the operating company had different ownership and management," said spokesman Sam Crafter.

"Santos has fully co-operated throughout the process, including releasing a report on the operational issues uncovered in the Pilliga and bringing them to the attention of the regulator."

Since Santos took over Eastern Star, four "minor spills" had occurred at the project, but all were reported to authorities.

Following community pressure, the NSW government is moving to introduce legislation banning CSG exploration and production within 2km of existing "and future" residential areas.

In the Pilliga, which is not affected by those bans, Santos plans to drill about 400 gas wells, spending more than $2 billion.

The group said it has spent $17 million on rehabilitation work following the spills.

Meanwhile the NSW Government has approved the drilling of 8 exploration wells, even as it takes Santos to court of these earlier breaches.

Environment group the Wilderness Society says the company did not report the spills until the public tested water and went to the media.

"Santos should be held to the maximum fine of one million dollars for a corporation because of the lengthy time, the multiple spills we are seeing out there, and the fact that they did not report them when they knew they were going on."

Spokeswoman Naomi Hogan says the spill contained high salt levels and heavy metals such as arsenic, lead, chromium and boron.

"This has had a huge impact on the biodiversity of that very fragile area where we've seen a huge amount of tree deaths, the soil is ruined and a lot of the local community including farmers are looking at this and saying what if that happened on my property. "